Prime Minister David Cameron has pledged to prioritize jobs and economic growth in 2011, but his New Year's message warns of tough times ahead with harsh budget cuts needed to tackle Britain's massive deficit.
Small businesses — not the debt-ridden government — will be the most important job creator, Cameron said, and he promised to consider more bank lending and other measures to help entrepreneurs grow and create a "new economic dynamism" in Britain.
Despite that upbeat note, Cameron acknowledged that tough austerity measures mean 2011 will be a rough year for many.
"We have been living seriously beyond our means," he said. "2011 is going to be a difficult year, as we take hard but necessary steps to sort things out."
Cameron became prime minister in May, inheriting a record spending deficit of about 109 billion pounds ($172 billion), racked up during the world financial crisis.
Since then he has overseen the announcement of 81 billion pounds ($128 billion) in public spending cuts through 2015. The measures will see as many as 330,000 public sector jobs lost and vastly reduce welfare payments.
Referring to the economic crises in Greece and Ireland, Cameron said that Britain's economy faced similar dangers before his government pulled the country out of the danger zone.
Although harsh, he said the austerity measures his government has introduced could restore confidence in the nation's economy.
"Together, we can make 2011 the year that Britain gets back on its feet," he said.
Opposition Labour leader Ed Miliband, in his own New Year's message, criticized the speed and scale of the government's deficit reduction plan as "irresponsible," saying hardworking families would feel the effects of the spending cuts most painfully next year.
British union leaders have warned of a surge in strikes next year to protest the planned cuts and increases in taxes and university tuition fees.
Other areas Cameron listed as his priorities include enhancing school spending for poorer students, cutting bureaucracy in public services, and stepping up national security.
On Afghanistan, the leader of Britain's coalition government said 2011 would be a crucial year as British troops begin to transfer security responsibility to Afghan control. More than 340 soldiers and civilian defense workers have died in Afghanistan since operations began there in 2001, and Cameron has said troops will end their combat role in Afghanistan by 2015.
"As the Afghans become steadily more capable of looking after their own security, so we will be able to start bringing our own forces home," the British leader said.